9911796707
TMI Blog2013 (8) TMI 1050X X X X Extracts X X X X X X X X Extracts X X X X ..... creditors MP Traders filed company petition bearing Company Petition No. 708 for winding up of the company. However, in 1992, the parties arrived at consent terms in the said winding up petition and the company agreed to repay their dues as per the schedule of payment. It seems that the company failed to honour it's commitment resulting into breach of terms of payment in view of the default column in the schedule of payment. On 22nd November, 1989 an ad interim order was passed by the learned Company Judge of the hon'ble High Court of Bombay and an official liquidator was appointed, who took over charge of all the assets of the company. Thereafter, in the year 1989, the Bank of Baroda initiated proceedings against the company before Debts Recovery Tribunal-II ('DRT-II'), Ahmedabad by filing OA No. 199 of 1989 for recovery of a sum of ₹ 90.70 lakh, along with interest due on the said debt, which was quantified as ₹ 208.73 lakh as on 31st December, 1986. On 11th September, 2000, as per the order passed by the DRT-II, Ahmedabad, the claim of the bank was allowed, and accordingly, the recovery certificate was also issued. In addition to the above, the compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the petitioner in time. Consequently, by an order passed on 14th February, 2008, DRT, Ahmedabad decided that the amount mentioned in the recovery certificate has been paid by the company to the Bank of Baroda and accordingly, "no dues certificate" was issued by the Bank of Baroda on 29th December, 2007. The bank had also kept with itself another sum of ₹ 50 lakh, which was deposited in a "no lien account" and this money was also paid by the petitioner. 1.6 It is further pleaded by the petitioner that the recovery certificate dated 14th February, 2008, issued for recovering ₹ 95 lakh was cancelled and the DRT decided that the above debt has been satisfied and the Bank, certificate holder, was directed to release the documents and title deed of the properties and to intimate the same to the concerned revenue authorities to fill the changes on the said property. Thereafter, on 29th December, 2007, the charge was created before the Registrar of Companies ('RoC'). 1.7 It is further the case of the petitioner that on 28th December, 2007, an agreement was entered into by the company represented by it's managing director, the petitioner he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additional director with effect from 27th December, 2007, for which Form 32 was filed by the company on 19th August, 2010. Later on the said respondent No. 3 Mr. Narendra Kumar Ambawat was appointed as a regular director with effect from 18th December, 2008 and Form 32 was filed on 23rd August, 2010. The petitioner has challenged his removal from the post of director and appointment of respondent No. 3 as unauthorised, illegal, non est and liable to be set aside, inter alia, on the following various grounds: (i) Because, no proper or valid Board meeting or AGM was held to appoint respondent No. 3 as additional director or director and further, the procedure adopted in appointing the respondent No. 3 as a director is totally alien to the provisions of the Act. The documents have been fabricated with a view to oppress the petitioner to mismanage and swindle the assets of the company acquired from the petitioners' money. (ii) Because, the respondent Nos. 2 and 3 with collusion and in connivance with the company secretary, have removed the petitioner from the post of director. (iii) Because, the extraordinary general meeting ('EGM') purportedly to have been held on 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a shareholder of the R1-company. 7. The learned PCS appearing for the respondents has submitted that Yakima Filters (P.) Ltd. is shown as respondent-company under the head of "loans and advances" in its balance sheet for the year ended on 31st March, 2009 to the extent of ₹ 1,28,06,263 and in the balance sheet ended on 31st March, 2010 to the extent of ₹ 1,13,64,603. It is further submitted that the balance sheet of Yakima Filters (P.) Ltd. for the said period filed as Annexure R-25 to the reply confirms the said position. It is, therefore, submitted that since the petitioner has not paid any money in his individual capacity, he is not entitled to agitate the grievances on behalf of Yakima Filters (P.) Ltd. who is one of the creditors of the R1-company. Referring to the provisions contained in section 397 of the Act, the learned PCS appearing for the respondents submitted that under section 397 of the Act, the matter must relate to the rights of the petitioner as a shareholder/member and not as a creditor. It is, therefore, submitted that the present petition is not maintainable, as the said company is a creditor and not a shareholder of the R1-company. 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen learned member. According to him, the respondents had no opportunity to lead their evidence at that point of time. He then took me to the Annexures R-5, R-6 and R-7 containing the names of the members. According to the learned PCS, from the perusal of the said annual returns for the year 2008, 2009 and 2010 it may be noted that there are 38 members. He, therefore, submitted that now at the final stage any finding given for the purpose of consideration of interim relief does not operate as res-judicata between the parties and, therefore, the said finding is meaningless and has no relevance at all. 12. I have considered the rival submissions and perused the record. First of all I would like to extract the relevant portion of the order dated 24th February, 2011: It is not in dispute that the petitioner is one of the members and shareholders of the company out of 10 shareholders holding 10 shares. The respondents have not denied the said fact. The other reliefs which are sought by the petitioner cannot be granted at this time unless the allegations made against such respondents are dealt with in detail at the time of final hearing. However, petitioner being a shareholder is enti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner and he has deliberately concealed and suppressed the said facts and on this point also, he claims, that the petition is liable to be dismissed being not maintainable. 15. Giving details of suppression of facts, the learned PCS for the respondents has submitted that the petitioner had deliberately suppressed the alleged agreement dated 30th December, 2008 and Board resolution dated 25th April, 2009 annexed as Annexures A-36 and A-37, respectively with the rejoinder. The learned PCS for the respondents has urged that the petitioner has also not shown any cogent reason as to why this agreement was not filed and annexed to the main petition despite he is placing reliance on the said documents. According to him, in fact the said agreement as well as Board resolution dated 25th April, 2009 are fabricated and forged documents. In continuation of his arguments, the learned PCS for the respondents has also referred to various documents filed as Annexures R-22 to R-29 filed along with the reply to show that the said documents were also suppressed deliberately. The learned PCS, therefore, submits that the suppression of these vital documents are very serious issue and it show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... served: It is of utmost importance that in making material statements and setting forth grounds in applications for special leave, care must be taken not to make any statements which are inaccurate, untrue or misleading. (2) S.P. Chengalvaraya Naidu v. Jagannath AIR 1994 SCC 853, the hon'ble Supreme Court has held as follows: A litigant, who approaches the court, is bound to produce all the documents executed by him which are relevant to the litigation. If he withholds a vital document in order to gain advantage on the other side then he would be guilty of playing fraud on the court as well as on the opposite party. The above principle has been reiterated in a recent judgment of the Supreme Court in the case of Daliv Singh v. State of U.P. (2010) 2 SCC 114 wherein it is, inter alia, held: 1. It is now well established that a litigant, who attempts to pollute the stream of justice or who touches the pure fountain of justice with tainted hands, is not entitled to any relief, interim or final. (3) K.D. Sharma v. Steel Authority of India Ltd. (2008) 12 SCC 481 wherein the hon'ble Supreme Court has held that: The learned counsel for SAIL is also right in urging tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any represented by its managing director, Dr. Aslam M. Ali, the petitioner and Mr. Gurbhaksh Singh Bhasin. It is further contended that on the said date, the company and its managing director offered 7,200 equity shares of ₹ 100 each to the petitioner herein as a consideration for the efforts, time and money spent by him for the settlement of the dues of the R1-company. According to him, the petitioner was allotted 10 shares of ₹ 100 each. It is further contended that the company had given an undertaking to the petitioner that it will allot 7,200 equity shares of ₹ 100 each to the petitioner as sweat equity shares with the same voting rights. The necessary requirements to allot the said shares, as required under the Act and issue of share certificates have not been done till date contrary to the promise made by the company, in spite of its acceptance as indicated in Annexure A-15 by the petitioner. It is, therefore, submitted that petitioner is entitled to allotment of shares and the action of R2 in not issuing 7,200 equity shares as resolved and offered in the Board meeting dated 28th December, 2007 is illegal and amounts to oppression and mismanagement. 21. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an cash for providing know-how or making available rights in the nature of intellectual property rights or value addition by whatever name called. Me further added that the petitioner was not a director on the date on the date of offer, i.e., 28th December, 2007. Further, he did not provide any know-how or intellectual property rights to the company. Therefore, he was not entitled to any sweat equity shares as per section 79A of the Act. 23. Next contention put forth by the learned PCS for the respondents is that the money was advanced by Yakima Filters (P.) Ltd. to R1-company as a creditor and is being repaid as per balance sheets of both the companies. Further, the petitioner has paid consideration only for 10 shares and failed to pay balance amount for which he cannot blame the respondents. It is, therefore, contended that his claim for 7,200 shares is baseless and is an attempt to divert the attention from various misdeeds and illegal acts committed by the petitioner against the interest of the company. 24. In order to prove the fact of non-payment of any consideration in respect of the impugned shares the learned PCS appearing for the respondents has submitted that the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... selling the company's property to Yakima Filters (P.) Ltd. by making bogus documents. Referring to the Annexure R-24, a letter dated 10th July, 2008 it was submitted that the respondents have withdrawn the power of the petitioner to create any mortgage in favour of Canara Bank for loan to be availed by Yakima Filters (P.) Ltd. According to him, he has compounded his fraud by creating mortgage of ₹ 4 crore in favour of Yakima Filters (P.) Ltd. and in order to protect himself, he fabricated to create a false defence agreement dated 30th December, 2008 and Board resolution dated 25th April, 2009 referred hereinabove. 26. The learned PCS for the respondents also drew my attention to Annexures R-21 and R-25 to show the repayment of loan of Yakima Fillers (P.) Ltd. It is, therefore, submitted that the claim of the petitioner is based on bogus and forged documents, in respect of which he has filed a criminal complaint and trial of which is going on and the petitioner has been arrested and is in jail. The learned PCS has also drawn my attention to Annexures R-28 to R-32 to show the repayment of dues to Yakima Filters (P.) Ltd. 27. Based on the above submissions it is contended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfer of 14,250 NVCI shares from Mr. Bhupendra Ratansi Bhatia and Mrs. Hansa Bhupendra to Dr. Aslam M. Ali; Whereas from time-to-time various understandings have been reached between Mr. Bhupendra Ratansi Bhatia and Dr. Aslam M. Ali and this agreement is entered into to confirm and consolidate the amendments to agreement dated 28th December 2007 and the understandings reached from time-to-time between "NVCI", Mr. Bhaupendra Ratansi Bhatia, and Dr. Aslam M. Ali and the resolutions as passed by the Board of directors of NVCI until the date of this agreement. Whereas Dr. Aslam M. Ali is in possession of land belonging to NVCI at Rajpipla, viz. 3,96,000 sq. ft of land belonging to "NVCI". Dr. Aslam M. Ali has been working on making the property marketable as otherwise the land is in the abandoned position and has been invested considerable time and money on the property. Whereas the land at Chitrawadi (Survey No. 24/2) belonging to NVCI has already been agreed to transfer to Dr. Aslam M. Ali by "NVCI" and Mr. Bhupendra Ratansi Bhatia. In consideration of mutual promises and other valuable considerations exchanged by the parties as set forth herein, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ali at the request of Mr. Bhupendra Ratansi Bhatia and to be accounted towards the purchase of 14,250 NVCI shares agreed to be sold/transferred by Mr. Bhupendra Ratansi Bhatia and Mrs. Hansa Bhupendra to Dr. Aslam M. All. (iv) Fourth instalment of ₹ 36.96 lakh payable in 2 monthly payments of ₹ 18.48 lakh payable after 180 days from the date Mr. Bhupendra Ratansi Bhatia and Mrs. Hansa Bhupendra transfer 6,849 NVCI shares that have been fully paid by Dr. Aslam M. Ali by himself and/or through Yakima Filters (P.) Ltd. (v) Fifth instalment of ₹ 75 lakh within 60 days after last payment under clause (3) para (iv). (vi) Sixth instalment of ₹ 75 lakh within 60 days after last payment under clause (3) para (v). (vii) Seventh and final instalment of ₹ 250.00 lakh which is to be used for establishing carbon complex for procurement of overseas technology, establishment of joint venture, market study, design engineering, consultancy and professional fees, etc. It is agreed by all the parties to this agreement that Dr. Aslam M. Ali has already started working on establishment of carbon complex and the progress made has been updated to Mr. Bupendra Ratansi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... garb of alleged act of oppression and he wants to seek the enforcement of agreement dated 30th December, 2007, which on the face of it even does not inspire any confidence. 31. Further, the aforesaid chain of events, in my view clearly establish that the petitioner has filed the instant petition for collateral purpose to enforce the alleged agreement dated 30th December, 2007 and to recover the amount advanced by Yakima Filters (P.) Ltd. to the company. Time and again various High Courts in their pronouncements have held that the petition filed by the petitioner under section 397/398 of the Act for collateral purpose should not be entertained and should be dismissed outrightly. It has also been propounded by the court in their decisions that any relief sought for by the petitioners for enforcement of contractual obligation in a petition filed under section 397/398 of the Act is also not maintainable and liable to be rejected. It is also pertinent to note that the said agreement is a private arrangement between the parties and it is not incorporated in the articles of association of the R1-company. Therefore, failure of one of the parties to such arrangement to abide by its commit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 31st December, 2008 and in the said meeting the petitioner was appointed as regular director in pursuant to a resolution passed in the said EGM appointing the petitioner as regular director. However, the respondent did not file the statutory Form 32. Thereafter, he was shown as removed from the post of additional director with effect from 3rd September, 2009. 34. It is further pointed by the learned counsel for the petitioner that on 19th August, 2010 Form 32 was filed before the RoC reporting the appointment of Mr. Narendra Kumar Ambawat, respondent No. 3 herein, as additional director with effect from 27th December, 2007 and further with effect from 18th December, 2008 Mr. Narendra Kumar Ambawat was appointed as a regular director and Form 32 was accordingly filed on 23rd August, 2010 in the office of RoC showing his appointment as a director. It is alleged that no meeting of the shareholders was in fact held on 18th December, 2008 nor any notice of such meeting was issued to the petitioner or to any other shareholder. It is, therefore, alleged by the learned counsel for the petitioner that removal of the petitioner as a director is manifestly illegal and the appointment of M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es in order to support his aforesaid submissions: (1) Hanuman Prasad Bagri v. Bagrees Cereals (P.) Ltd. (2001) 41 CLA 258 (SC) - The Division Bench noticed that the position that Petitioner No. 1 ceased to be a director is seriously disputed and the Division Bench ultimately concluded that the termination of directorship would not entitle such person to ask for winding up on just and equitable grounds inasmuch as there is an appropriate remedy by way of company suit which can give him full relief if such action had been taken by the company on inadequate ground. The Division Bench found that a director even if illegally terminated cannot bring his grievance as to termination to winding up the company for that single and isolated act, even if it was doing good business and even if the director could obtain each and every adequate relief in a suit in a court. (2) Rahul Shah v. AVI Sales (P.) Ltd. (2007) 81 CLA 259 (CLB), para 13 - The CLB, however, will have to consider the entire materials on record and the totality of the circumstances of the case. Otherwise too, the directorial complaints cannot be entertained in a petition under sections 397 and 398 of the Act and particularl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an additional director pursuant to section 260 of the Act. Further, he has failed to prove that he was appointed as a director at any point of time. Besides, it is also an established law that the directorial complaint cannot be termed as an act of oppression unless the principle of quasi-partnership is pleaded and proved. Admittedly, the present case is not the case, where the principles of quasi-partnership have been pleaded. According to the case of the petitioner himself, he was an investor in the company. Admittedly, he holds only 10 shares as on the date of filing of the petition and his holding constitutes only 0.050 percent of the total shareholding of the company. Therefore, in my opinion, claim for his representation on the Board does not seem necessary, just and proper. I, therefore, agree with the view of the learned PCS appearing for the respondents that directorial complaint cannot be said to be an act of oppression having regard to the facts of the case in hand. The said ground of oppression is also found untenable and rejected accordingly. For the reasons discussed hereinabove and taking into consideration the stock of entire facts and circumstances of the case, I a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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